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The Leahy-Smith America Invents Act: A Survival Guide to Impending Changes in the U.S. Patent Laws

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This article is a supplement to the November 2011 issue of Nevada Lawyer magazine.
On September 8, after years of debate and political posturing on patent reform spanning multiple congressional sessions and two administrations, the U.S. Senate overwhelmingly passed the LeahySmith America Invents Act (AIA) by a bipartisan 89-9 vote. The act had previously been passed by the House of Representatives in a similar resounding manner. One week and one day later, President Obama signed the landmark patent reform bill into law, thus providing the first overhaul of the U.S. patent system in more than half a century. The AIA has been repeatedly touted by elected officials as a jobs creation bill that provides a win for U.S. innovation and economic growth, in some cases purporting to create in the neighborhood of 200,000 jobs for the U.S. economy. Corporations with significant patent portfolios, law school professors and intellectual property professionals have also opined on the effects of the AIA, each having significantly differing views on the merits of the changes to the U.S. patent system varying from the demise of the U.S. economic advantage to providing much needed support for American inventors and innovation. Leaving the intellectual exercises and scholarly debates on the perceived consequences of patent reform for another time and place, it cannot be ignored that our patent system is important to growth and future economic viability. Patents provide significant economic advantages by allowing innovators to protect inventions through a governmental grant of a time-limited monopoly in exchange for a public disclosure of how to make and use their invention, and thus make R&D worth the effort and investment. The practical aspects of patent reform under the AIA for those with the most to lose focuses on three basic questions: what are the changes to the patent laws; when do the changes take effect; and what are best practices to comply with the changes so as to guard against a loss of patent rights.
Change to a First Inventor to File System
Among the many changes to the U.S. patent laws under the AIA, and probably the most significant to individual inventors and corporations that rely on the current patent system for protecting innovative ideas, the patent system will change from one of the only first-to-invent systems in the world to the more commonly used first-to-file approach. Under the soon to be defunct first-to-invent system, for purposes of priority, the date of conception becomes the date of invention, and the date of invention effectively trumps the date any patent application for the invention is filed with the U.S. Patent and Trademark Office (USPTO). In contrast, under the first-to-file system adopted into law by the AIA, the priority of a right to a patent grant is based solely on the effective filing date of the patent application. A distinct practical advantage of the first-to-file system lies in its simplicity. Consequently, when more than one application claiming the same invention is filed with the USPTO, the earliest postmark prevails. Since the two systems are considerably different, the change from the current first-to-invent to a firstto-file system requires a rewrite of the patent novelty rules of §102. For example, the one-year grace period has been eliminated, along with the one year statutory bar and the requirement that prior art must predate the date of invention. Under the new §102(a), patents, printed publications, public uses, sales, etc. that predate the patent application’s effective filing date constitute prior art, which is a much more powerful and definitive statutory bar than under the current laws. In addition, under the new first to file system, there is a limited one-year grace period in the limited circumstances of a public disclosure made by the inventor or another who obtained the subject matter directly or indirectly from the inventor. Significantly, the limited exception grants inventors the ability to negate any prior art from the one-year period prior to filing the patent application by engaging in public disclosure. However, any disclosure made prior to the filing date of the patent application by anyone oth-
er than the inventor, directly or indirectly, bars the inventor from receiving a patent on the disclosed subject matter. Recognizing the problems of allowing individuals to derive another’s invention and race to the USPTO to file first, the AIA actually creates a “first-inventor-to-file” system. Accordingly, instead of simply granting priority to the applicant who files the first patent application for an invention with the USPTO, an applicant must have independently invented the subject matter claimed in the patent application. To prevent patent applicants from improperly deriving another’s invention and winning a race to the USPTO, the AIA permits a patent owner to bring a “derivation hearing” at the USPTO against another patent owner. The Patent Trial and Appeal Board at the USPTO presides over the derivation hearing, filed within a one-year period beginning on the date of the publication of a claim in the earlier filed application, and determines whether the applicant of an earlier-filed application was the proper applicant for the claimed invention. Under the terms of the AIA, the first-to-file system and the amended prior art rules apply to patent applications filed 18 months after enactment. Therefore, the U.S. first-to-file system becomes effective on or about March 16, 2013. However, from a practical standpoint, it makes sense to consider and possibly implement best practices and procedures now in anticipation of the fast approaching changes that come with the new U.S. first-inventor-to-file patent system. For example, changing to a first-inventor-to-file patent system will require inventors to more carefully consider when they file their application. Since there is a genuine risk of losing patent rights to an earlier filed application, inventors will need to file their patent applications quickly and much earlier than they would under the current first-to-invent system. In addition, inventors may need to file a greater
number of applications, even if it means getting an extremely rough application on file early, and then secure the rights to each incremental change in the invention in separate filings as the product moves through the development cycle. In view of the swiftness and fluidity that will be necessary under a first-inventor-to-file system, there is likely to be a significant increase in the use of provisional patent applications, which are essentially placeholder applications filed with the USPTO for purposes of priority. Provisional patent applications are often referred to as a placeholder because they are, generally speaking, a less formal patent application that is not required to include a formal claim and is never formally examined by a patent examiner. Practically speaking, the provisional application can be prepared much quicker than a regular non-provisional utility application, while providing an early effective filing date to a later filed nonprovisional patent application that is actually examined by the USPTO. Thus, under the impending first -to-file system, the provisional patent application is going to be an increasingly important tool to help inventors move quickly and win the filing race to the USPTO.
Improving Patent Quality
Most would probably agree that there has been a gradual deterioration in the quality of issued patents and, therefore, an equal decline in the merits of many patent infringement lawsuits. Unfortunately, the federal court system is severely overburdened and, therefore, is ill equipped to quickly rule in an infringement or declaratory judgment lawsuit involving the validity of an issued patent. Moreover, the administrative inter partes and ex parte reexamination procedures at the USPTO often take 18 months or more to deliver a final determination on the validity of a patent. To avoid the substantial time and cost associated with the current systems, advocates of patent reform sought increased USPTO review during both the prosecution and post-issuance period so as to increase the likelihood of higher quality patents. In response to the concerns relating to deteriorating patent quality, the AIA includes several provisions that help the USPTO eliminate low quality, overly broad patents. For example, the AIA establishes the opportunity for third parties to submit prior art relating to a pending application for consideration by a patent examiner. By allowing prior art to be submitted and explained, patent examiners will have a valuable tool at their disposal to grant higher quality patents. In addition, the AIA creates a post-grant opposition proceeding, open for nine months after the grant of the patent, to allow challengers to attack patents that arguably should never have issued. Both provisions take effect one year after enactment of the AIA. Therefore, on September 16, 2012, the USPTO will open two new doors for third parties to assist in the improvement of patent quality.
The many changes under the AIA are complex and take effect at various times during the next 18 months. Therefore, innovators and entrepreneurs who rely on the patent system to protect their intellectual capital must sit down with an intellectual property specialist and discuss the changes and how each change will affect current best practices. Patent reform is no longer an interesting hot topic for debate – on September 16, 2011 it became a reality. Ronald C. Gorsché, Jr. is registered patent attorney, a 1991 graduate of Marquette University (BSEE) and a 1997 graduate of the University of Wisconsin-Madison (JD). He is currently Of Counsel in the Las Vegas office of the law firm Gordon Silver.
This document is © 2011 by jsmith22 - all rights reserved.
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